How to Invest 1 Crore for Monthly Income?

Investing 1 crore for monthly income to generate a steady and passive income stream is something many investors wish to achieve through monthly income schemes. However, choosing the right investment option can be challenging, as there are many factors to consider, such as risk, return, tenure, tax implications, and financial goals.

Top 5 Investment Options to Invest 1 Crore for Monthly Income

SchemeExpected Annual ReturnMonthly Return (INR)

Note:

The “Monthly Return” column represents an estimate based on the investment amounts and expected annual returns. The actual monthly returns may vary due to factors like compounding, market conditions, prevailing interest rates, tax implications and other factors.

*Mutual funds returns are subject to market risks and do not guarantee returns.

**The monthly income from FD, CD and POMIS is the interest generated from the principal amount. On maturity, the principal is repaid to the investor. POMIS has a maximum investment limit of INR 15 lakhs (joint account).

***Real estate returns can be perennial income till the time investors are able to rent/ lease the property. Pan India average rental yield estimates. The current rental yield is subject to variations depending on locations.

1. Mutual Funds

Debt Mutual Funds: Systematic Withdrawal Plans

Systematic withdrawal plans (SWPs) are a facility offered by mutual funds that allow investors to withdraw a fixed amount from their investment regularly. SWPs can help investors generate a regular income from their debt mutual fund investments.

They can help investors avoid market timing risk and benefit from rupee cost averaging, as they withdraw a fixed amount irrespective of the market conditions.

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SWP withdrawals comprise capital gains and invested capital. Only if the withdrawals are equal to or less than the capital gains, the invested capital will remain intact.

From the above estimation, investing INR 1 crore for 30 years and opting for an SWP of INR 50,000, you will still have INR 87,09,263 left with you.

However, it is essential to consider the impact of inflation. The purchasing power of INR 50,000 today will not be the same 30 years from now. The worth of INR 50,000, 30 years from now, will be INR 8,705.51 (at a 6% inflation rate).

2. Fixed Deposits

Fixed Deposits (FDs) are widely recognised as a secure and popular investment avenue for generating monthly income. To open an FD account, you can choose any bank or post office and deposit a lump sum amount for a predetermined period, ranging from 7 days to 10 years.

The interest payout frequency can be selected as monthly, quarterly, half-yearly, or annually. Interest rates may vary based on tenure, deposit amount, and the specific bank. Generally, longer-term FDs tend to offer higher interest rates compared to shorter-term ones.

At the end of the FD tenure, investors must renew their deposits to continue to generate monthly income. Most banks offer auto-renewal, which automatically renews the FD at the prevailing interest rate.

3. Corporate Deposits

Corporate Deposits are fixed deposits offered by non-banking financial companies (NBFCs) and corporates to raise funds from the public. These deposits come with various tenures, typically ranging from 1 year to 5 years, and offer interest payouts on a monthly, quarterly, half-yearly, or annual basis.

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The interest rate of corporate deposits depends on factors such as the tenure, deposit amount, and credit rating of the issuer. Generally, corporate deposits provide higher interest rates than bank FDs but lower rates than equity funds. Also, they are risker than bank FDs.

At the end of the deposit tenure, investors must re-invest the capital in other scheme to generate monthly interest income.

4. Post Office Monthly Income Scheme

The Post Office Monthly Income Scheme (POMIS) is a government-backed initiative designed to provide monthly income to investors. It offers a reliable option for individuals seeking assured returns and capital preservation. The minimum deposit required is INR 1,000 rupees, while the maximum deposit limit is INR 9 lakh for a single account and INR 15 lakh for a joint account. The tenure for POMIS is set at 5 years, with a current interest rate of 7.40% per annum, payable on a monthly basis.

5. Real Estate

Real estate is a physical asset that involves buying and selling land, buildings, or properties. It can be used for residential, commercial, or industrial purposes. Real estate can generate income by renting or leasing the property to tenants or users. Capital appreciation is another benefit that investors can enjoy. Moreover, by increasing the rent amount by 10% annually, the income also grows, effectively countering the impact of inflation.

Alternatively, investing in real estate investment trusts (REITs) could provide exposure to the real estate sector without the burdens associated with owning physical properties.

Often real estate investments are considered to be capital-intensive. Fractional ownership offers a streamlined and collaborative approach to real estate investment, allowing individuals to purchase a portion or share of a property rather than the entire property. Investors can acquire fractions or shares of residential or commercial properties based on their specific goals, financial resources, and personal preferences.

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How to Invest 1 Crore for Monthly Income?

Investing INR 1 crore to generate regular monthly income is quite challenging. Investors must carefully analyse their requirements and ensure the selected asset class is able to generate the expected returns. Since 1 crore is a large sum, it is advisable to diversify the investment across different assets to minimise risk.

Let’s take an example, Mr Bhargav wants to invest INR 1 crore such that he is able to generate monthly income to meet his expenses. The following table summarises the investment allocation across different assets such that Mr Bhargav is able to diversify his investments.

SchemeInvestment Amount (INR)Expected Annual ReturnMonthly Return (INR)Total1,00,00,00040,125

Note:

The “Monthly Return” column represents an estimate based on the given investment amounts and expected annual returns. The actual monthly returns may vary due to factors like compounding, market conditions, prevailing interest rates, tax implications and other factors.

*Mutual funds returns are subject to market risks and do not guarantee returns. With the SWP option, investors can regularly withdraw their invested capital.

**The monthly income from FD, CD and POMIS is the interest generated from the principal amount. On maturity, the principal is repaid to the investor. POMIS has a maximum investment limit of INR 15 lakhs (joint account).

***Real estate returns can be perennial income until investors can rent/ lease the property. Pan India average rental yield estimates. The current rental yield is subject to variations depending on locations.

It is advisable to consult with financial professionals or conduct further research before making investment decisions.